Labour on National Minimum Wage Bill

Update on the Labour Amendment Bills with specific reference to the National Minimum Wage Bill currently before Parliament

Introduction and Background:

The genesis of the National Minimum wage starts with the 2014 ANC Election manifesto where it states, Investigate the modality for the introduction of a national minimum wage as one of the key mechanisms to reduce income inequality. Take steps to strengthen existing laws to ensure faster change in employment equity in all workplaces by enforcing an accelerated implementation of employment equity targets. Enforce measures to eliminate abusive work practices in atypical work and labour broking.

On the 17 June 2014, the immediate past President of the Republic, in his state of the Nation Address following the National General Elections, said that, Given the impact of the untenable labour relations environment on the economy, it is critical for social partners to meet and deliberate on the violent nature and duration of the strikes. The social partners will also need to deliberate on wage inequality. On our side as Government we will during this term investigate the possibility of a national minimum wage as one of the key mechanisms to reduce the income inequality. Deputy President Cyril Ramaphosa will convene the social partners’ dialogue, within the ambit of NEDLAC.

Indeed on 04 November 2014 a Labour Relations Indaba was convened under the auspices of the National Economic Development and Labour Council (NEDLAC) to set in motion the process of engagement on examining the modalities of introducing a National Minimum Wage in South Africa.

The Labour Relations Indaba gave birth to the Ekurhuleni Declaration where constituencies acknowledged challenges of unemployment, poverty and inequality facing South Africa and the economy. Flowing from the Indaba the first Technical Task Team on Labour Relations (LRTTT) was constituted and immediately given the mandate to engage on the following issues:

Promotion of employment

Labour Market Stability

Protracted Strikes

Violence

Collective Bargaining and the Role of the State

Employment, vulnerability and social protection

The second Technical Task Team on Wage Inequality (WITTT) was mandated to focus on addressing and engaging on a National Minimum Wages (NMW).

April 2015 saw the beginning of engagement on the work of the LRTTT and WITTT reporting to the Committee of Principals (COP). The whole process was fore-grounded on strong research and international best practice around the concept of a national minimum wage. By and large the engagements were evidence-driven with a careful eye on finding the delicate balance in order to manage any un-intended consequences that may arise.

Parallel to these processes, Parliament commenced its own investigations on the modalities of introducing a national minimum wage in South Africa. We know that the Parliamentary process took the form of workshops and consultations with the general public throughout the country.

During the period from December 2016 to February 2017 intensive engagements by social partners continued. This culminated into an Agreement in February 2017. The Agreement in question was signed by social partners. The Advisory Panel which was set up to examine the second phase of work on the Minimum Hours of Work, completed its assignment in June 2017.

The introduction of the National Minimum Wage including Enforcement:

The Bills before Parliament proposes that the National Minimum Wage be set at R20 per hour and be reviewed annually.

It is important to note that the NMW is a floor below which no worker can be paid; and this incudes workers that are covered by sectoral determinations as well as collective bargaining agreements.

However the minimum wages for domestic and farm workers will initially be set at R15 and R18 an hour respectively. This will be adjusted to reach the NMW within two years of implementation. The National Minimum Wage Commission will be established to review the NMW annually taking into consideration the inflation and other labour market and socio economic conditions.

Labour market stability measures:

The agreement at NEDLAC contains a Code of Good Practice on Collective Bargaining, Industrial Action and Picketing. This Code provides practical guidance on collective bargaining, the resolution of disputes of mutual interest, the resort to peaceful industrial action and picketing processes.

The Accord on Collective Bargaining and Industrial Action, commit social partners to take all steps necessary to prevent violence, intimidation and damage to property. It also seeks to improve the capacity of the social partners and other agencies to resolve disputes peacefully and expeditiously.

The Labour Relations Amendment Bill and the Basic Conditions of Employment Bill contains amendments that are consequential to the National Minimum Wage Bill and the agreed Code on stabilising the labour relations environment in South Africa.

The National Minimum Wage Bill together with The Labour Relations Amendment Bill and the Basic Conditions of Employment Amendments Bill were referred by Cabinet to Parliament in November 2017.

On 22 November 2017, the Speaker of the National Assembly referred the Bills to the Portfolio Committee on Labour for consideration.

The Portfolio Committee has drawn up its own programme on how to consider the Bills, including conducting their own public hearings. The process is now entirely in the hands of Parliament.

Implementation date for the National Minimum Wage:

We know that these Bills, like any matter that has to do with labour relations in South Africa, are highly contested policy propositions. We are therefore not surprised by the enthusiasm that the public hearings have generated. We however take comfort from the fact that these Bills have passed the Social and Economic Impact Analysis test and we have no doubt that they will also pass the Constitutional scrutiny.

We are aware that interested parties have been making submissions on these Bills, and it has become apparent that the ambition for the National Minimum Wage Bill to become law by 1 May 2018 may not be practical given the high volumes of public submissions both written and oral.

We are also aware of a number of important issues that are being raised in these public hearings which parliament will have to consider as part of concluding the Bills. We stand ready to take instructions from the parliamentary process.

It has never been the intention of government to rush these Bills and we fully recognise and respect the sovereignty of parliament in this regard. We will respectfully take our cue from the parliamentary processes and we will cooperate fully with the work of Parliament in this regard.

At this stage we must all accept and allow the Parliamentary processes to unfold without any undue interference. All the Bills are now under the authority of parliament and those who have views and opinions on the Bills will have to approach parliament as we, the Executive, no longer have control of these processes.

The Parliamentary process as we understand will unfold as follows:

1. On conclusion of the current Public Hearings, the Committee will consider the submissions both written and oral.

2. Revisit the Bills with a view to factor-in any changes and/or amendments where they deem appropriate.

3. Deliberate on the Revised Bills with a view to find convergence including engaging the Bills on a line by line basis.

4. Vote on the Bills in preparation to submit to the National Assembly and the NCOP respectively.

5. Everything being equal, the Bills are then sent to the President for sign-off.

It is for these reasons that the observation coming out of the current processes is that it may not be possible to conclude all these processes in time for implementation on 1 May 2018 as initially envisaged. You will know however that the 1 May 2018 implementation ambition has always been subject to the completion of the parliamentary processes.

The National Minimum Wage legislation marks an important new milestone in the history of labour relations in South Africa; therefore we want to follow all due processes diligently.